Thirty of the city’s 150 trucks now use CNG. McCary says the city is saving $1 to $1.25 per gallon for CNG compared with diesel, but each new truck costs about $60,000 more than its diesel counterpart. The city also opened a $1.3 million refueling station this year.

McCary says it took $918,000 in state grants to make the deal work. “We wanted to make sure we were getting the most bang for the buck.”

Nationwide, fleet managers are giving alternatives to gasoline and diesel a longer look, in part, because the American Recovery and Reinvestment Act included $300 million in incentives.

The U.S. Department of Energy awarded $38 million to Texas. The Comptroller’s State Energy Conservation Office (SECO) also set aside $11 million for alternative fuels. That’s in addition to existing federal tax credits and state incentives from the Texas Commission on Environmental Quality and the General Land Office.

Tax credits and government incentives help offset two barriers to converting to alternative fuels – the higher upfront costs of the vehicles and a shortage of refueling stations. For example, Sussman estimates that there are fewer than 20 public CNG stations in Texas.

Here are the alternative fuels projects funded by the federal stimulus program in Texas:

SECO will reimburse public entities the added costs of buying alternative-fueled vehicles instead of gasoline or diesel models. The office will consider applications for a variety of alternative fuels – from plug-in hybrids to biodiesel to CNG.

Money also is available to buy equipment for refueling stations.

SECO projected it could help purchase 750 light-duty vehicles, 400 heavy-duty vehicles and the equipment for about a dozen new refueling stations.

“We’re interested in projects that help the environment and make financial sense for the taxpayers,” she says.

The Texas Railroad Commission promotes propane as an alternative fuel. In fiscal 2010, its $12.6 million grant will deploy 882 propane vehicles, including 245 school buses, 24 trucks and 613 light-duty vehicles for school districts and public agencies. Thirty-five refueling stations will be constructed to support the propane vehicles.

The commission partnered with 40 school districts, cities and state agencies in applying for the money.

The North Central Texas Council of Governments received $13.2 million to purchase vehicles and build refueling sites in the Dallas-Fort Worth area. The plan includes projects for biodiesel, ethanol, CNG, electric and hybrid vehicles. In addition to public fleets, the alternative fuel programs will benefit “high-visibility fleets,” such as Coca-Cola, Sysco, Frito-Lay and Irving Holdings Inc., which operates Yellow Cab.

Texas State Technical College (TSTC) received almost $12.3 million to create a nationwide network of liquid propane (sometimes called Autogas) fueling stations. The college also will create a program to retrain and certify military veterans and out-of-work service technicians to work in the alternative fuels industry.

TSTC’s partners in the private sector include ConocoPhillips, Clean Fuels USA and Public Solutions Group.

In San Antonio, the new CNG-powered garbage trucks are getting good initial reviews. But city officials are studying the operating and maintenance costs as well as monitoring the air quality at the refueling site.

“CNG is an experiment,” says Catarino DeLuna, the city’s fleet manager. “But there’s a possibility this may grow.” TR